11/22/17 – The Consumer Financial Protection Bureau (CFPB) took action against Citibank, N.A. for student loan servicing failures that harmed borrowers.
. Specifically, the Bureau found that Citibank:
- Citibank misled borrowers into believing that they were not eligible for a valuable tax deduction on interest paid on certain student loans.
- The company also incorrectly charged late fees and added interest to the student loan balances of borrowers who were still in school and eligible to defer their loan payments.
- Citibank also misled consumers about how much they had to pay in their monthly bills.
- Citibank failed to disclose required information after denying borrowers’ requests to release loan cosigners.
The Bureau is ordering Citibank to end these illegal servicing practices, and to pay $3.75 million in redress to consumers and a $2.75 million civil money penalty.
“Citibank’s servicing failures made it more costly and confusing for borrowers trying to pay back their student loans,” said CFPB Director Richard Cordray. “We are ordering Citibank to fix its servicing problems and provide redress to borrowers who were harmed.”
The CFPB’s order requires Citibank to:
- Refund $3.75 million to harmed consumers
- Make changes to their servicing practices
- Pay a $2.75 million fine
- For copy of the Citibank consent order.
- Copy of the Borrower’s Consumer Advisory “Bad Information about your college enrollment status can cost you“
With the announcement that Richard Cordray is stepping down from the Consumer Financial Protection Bureau “CFPB” the Trump administration will amp its attempt to water down the power of the organization. CFPB is the only organization that actively protects the consumers and hold run away businesses (Wells Fargo, Citibank to name two of many). If Trump has his way any changes in the CFPB will lead to either reversing prior orders or reduce, if not eliminate, future attempts to control and/or punish illegal and immoral acts by businesses, including banks.